You wouldn’t dust off the old Selectric if you wanted to write a memo, or use a football-sized mobile phone a la Gordon Gekko to make a call. So why are you using pre-digital methods to segment your consumer base and determine what digital experiences they receive?
Well, maybe you’re not stuck in the past, but too many in the industry are. They’re content to use old models for understanding consumers rather than taking advantage of the massive torrent of data that the digital age has turned on to get better results from digital marketing. When it comes to targeting, there’s a lot of room for companies to get smarter.
In my role as digital agency Razorfish’s global chief technology officer, I’ve been aggressively counseling brands to take advantage of cloud computing and Big Data. But it’s not enough to just collect the data. You have to use it, and too many executives aren’t, as was clear in a recent study from Razorfish and Adobe (CMO.com's parent company). Together, we conducted the first-ever Targeting Readiness Study, based on conversations with more than 120 executives in the U.S., including CEOs, CIOs, CTOs, and CMOs.
The survey revealed a big gap between where marketers are and where they should be on targeting. Besides using old segmentation approaches and looking only at the top of the purchase funnel, brands aren’t always sure which digital channels they control, and internal barriers that slow or even stop the development of targeting capabilities are common.
In this article, I’m going to walk you through the issues and provide a schema for understanding where you fall on the targeting spectrum.
Digital Segmentation For A Digital World
Because 49 percent of survey respondents consider themselves strong at targeting experiences to segmented groups of online audiences, we expected to see more businesses demonstrating maturity with their site-side segmentation capabilities. Surprisingly, only 12 percent have implemented the ability to target a recognized segment and measure the results. Less than 50 percent were able to recognize a returning/loyal customer versus a prospect.
When I take a look at a brand’s segmentation approach, I often see something like this: five to 10 personas based on historical sales data and customer profiles. I know the brand is likely capturing an enormous amount of behavioral information from its digital properties—precious information about their activities, habits, and attitudes that aren’t being used. The focus is often customer acquisition, which ignores consumers who are deeper in the customer journey, and on revenue-per-segment, a metric that doesn’t take into account the lifetime value of a customer. (Note, we avoid calling it a “sales funnel” because digital has broken the nice, neat funnel of old. Now customers can and do take diverse journeys to acquisition.)
This yields bad consumer interactions. In the absence of behavioral data that gives you a sense of who they are, consumers aren’t being served personalized experiences that reflect where they are in the customer journey. And where there’s no customization, conversion rates are lower, and your ad dollars are wasted.
Now apply that behavioral data and a whole different world emerges. Microsegments appear and allow for the creation of more tailored experiences that reach customers further down the purchase funnel, in trial, or even at advocacy stages. This isn’t just a nice-to-have; there’s triple-digit ROI growth to be had here.
Next Page: Setting targeting priorities.
Closing this gap comes down to the priorities you and other C-level executives set. When we asked executives to tell us how they prioritize their efforts to meet customer expectations, we found that, in general, there was a strong focus on improving interactions between channels. I was surprised to see that personalization is lowest on the priority scale.
This is clearly impacting the ability to target. Only 12 percent--12!--claim to have the ability to target a specific customer segment and measure the results for optimization. We see an executive disconnect between segmentation development and digital execution in the fact that 55 percent can’t use their data to tell which customers to grow, win back, retain, or acquire--and 52 percent believe they are in the early stages of recognizing a customer against their segmentation strategies and delivering a targeted experience.
In fact, even using a finite number of segments is limiting. Finite segmentation is a holdover from the old days of marketing where we didn’t have the near limitless computing capabilities. Computing power enables an “infinite” number of segments through algorithmic personalization.
Who Owns What?
Quick: Is your brand’s Facebook page paid, owned, or earned? What about its Web site? Or its Pinterest presence? Years after the industry started dividing media into the three PEO buckets, there’s still plenty of confusion about what goes where. And it’s not just a semantic problem. It cuts to the heart of how to extract the most unified customer value from those channels.
While we expected that close to 100 percent of businesses would consider their .com site an owned property, there were much fewer. Results show that only 82 percent of these companies view .com as an owned channel, and 50 percent consider mobile part of their owned assets. But Facebook actually trumped mobile: Sixty percent consider the social network an owned channel.
Today’s reality is that .com may not be your primary owned channel because the scope of what constitutes an “owned” channel is merging with other territories. Knowing that every interaction, regardless of channel, has the potential to create value, we need to rethink siloed ways of organizing experiences from paid, earned, and owned, and start considering all channels’ opportunities to learn more about customers and deliver experiences that we can control.
What’s Your Targeting Level?
>> Baseline: Start testing, start learning. If you are not using your digital channels as opportunities to learn the basics about your customers, then you’re missing a great opportunity. You can always take a single or collection of data points--think geography, for instance--and test customized content. This approach may not produce triple-digit gains, but you will most likely see some immediate opportunities to improve conversion.
>> Level 1: Cross-channel insights. A unified, cross-channel view of your customer data means you can then conduct analysis and emerge with a single view of the customer that will fuel future experience and content development.
>> Level 2: Informed media. Data from owned properties, combined with enterprise transactional data, is integrated and used to control media bidding and remessaging for off-network personalization. That opens the pathways for more efficient and qualified audience buys for the right kind of prospective customers.
>> Level 3: Dynamic targeting in a single channel. Data from cross-channel analysis focused on building experiences, measuring performance within single channels, and being aware that your blueprint will help keep you aligned to the ultimate goal of cross-channel targeting.
>> Level 4: Dynamic, multichannel targeting. A strong technology platform, advanced analytics, content creation strategy, and organizational support translate into a seamless customer experience, regardless of online/offline or which device the customer uses to engage.
>> Level 5: Multichannel retail and service. Digital is optimized for targeting across all channels, and now the focus is making in-person interactions as guided as digital, enabling the sales process, for instance, to start in-store and finish at home.
Once you figure out your level, then you can set out to drive collaboration among your creative and tech teams, evaluate your vendors, and tweak your strategy and measurement approaches. Only then will you fully be tapping into the power of Big Data.
-- Mark Taylor, VP, and Cory Cruser, Principal Consultant, Razorfish Consumer Insights Group, contributed to this article.